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Indonesia GDP Q4 2016

Indonesia: GDP growth picks up in Q4, comes in at six-year low for 2015

February 5, 2016

Indonesia’s economy gathered steam in the fourth quarter last year, but still tallied the slowest growth in six years in 2015, weighed upon by tepid domestic demand and plunging exports. GDP growth picked up from Q3’s 4.7% to 5.0% in Q4 over the same period of the previous year and came in at 4.8% for the full year 2015 (2014: 5.0%). Q4’s result was slightly above FocusEconomics’ panelists projections of a 4.9% expansion and marked the best result in one year.

Q4’s upturn reflected gains from an acceleration in government spending as President Joko Widodo’s efforts to stimulate the economy bared fruit. The government introduced a series of stimulus measures in September and October designed to kick the economy into a higher gear. Government consumption expanded a significant 7.3% annually, which followed Q3’s 7.1% increase and marked the biggest expansion since Q4 2013. Fixed investment also gained traction, expanding 6.9% (Q3: +4.8% year-on-year) and likely supported by the government’s efforts, while private consumption remained lackluster growing 4.9% (Q3: +5.0% yoy).

Meanwhile, the external sector continued to suffer the effects of sluggish global demand and falling commodity prices. Exports contracted a significant 6.4% in Q4, which marked a multi-year low and followed the 0.6% drop registered in Q3. Imports plummeted 8.1%, which was a more pronounced fall than Q3’s 5.9% drop. As a result, the external sector’s net contribution to overall growth moderated from 1.2 percentage points in the third quarter to 0.4 percentage points in the fourth quarter.

FocusEconomics Consensus Forecast panelists expect the economy to expand 5.1% in 2016, which is unchanged from last month’s forecast. For 2017, the panel sees economic growth at 5.3%.